The purpose of this paper is to explore the determinants of innovative capabilities in Turkish SMEs, with a particular emphasis on the impact of recent changes in science and technology policy. Two different analyses are conducted in order to evaluate both the decision to innovate and the propensity to innovate, using a unique firm-level survey realized among 50.000 SMEs. Our results suggest that the new policies did not manage to address the whole issues that are preventing Turkish SMEs to achieve a higher innovative capability and growth.